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Criteria for Domicile Explained

In upholding Surrogate Court’s determination decedent’s domicile was New York, the First Department explained the relevant criteria as follows:

The Surrogate’s Court Procedure Act defines domicile as “[a] fixed, permanent and principal home to which a person wherever temporarily located always intends to return” (SCPA 103[15]). “The determination of an individual’s domicile is ordinarily based on conduct manifesting an intent to establish a permanent home with permanent associations in a given location”…. A person’s domicile is generally a mixed question of fact and law, which the court must determine after reviewing the pertinent evidence…. No single factor is dispositive…, and the unique facts and circumstances of each case must be considered…. A party alleging a change of domicile has the burden of proving that change by clear and convincing evidence … .  Matter of Ranftle, 2013 NY Slip Op 05006, 1st Dept 7-2-13

 

Late Notice of Election, Caused by Law Office Failure, Should Have Been Allowed

The Second Department determined Surrogate’s Court should have granted decedent’s surviving spouse’s petition for leave to file a late notice of election against the decedent’s estate.  The spouse executed a notice of election which was served on the attorney for the executor, but, because of law office failure, was never filed with Surrogate’s Court:

EPTL 5-1.1-A(d)(1) sets forth the specific procedures to be followed in exercising a right of election. “If the spouse defaults in filing such election within the time provided in subparagraph (d)(1) of this paragraph, the surrogate’s court may relieve the spouse from such default and authorize the making of an election . . . provided that no decree settling the account of the personal representative has been made and that twelve months have not elapsed since the issuance of the letters” (EPTL 5-1.1-A[d][2]). “An application for relief from the default and for an extension of time to elect shall be made upon a petition showing reasonable cause and on notice to such persons and in such manner as the surrogate may direct” (id.). Here, the surviving spouse demonstrated “reasonable cause” for her failure to timely file her notice of election by establishing, inter alia, that the delay was caused by law office failure, and she further established the absence of prejudice to any party (EPTL 5-1.1-A[d][2] … .  Matter of Sylvester, 2013 NY Slip Op 04613, 2nd Dept, 6-19-13

 

Undue Influence Criteria Explained

The Fourth Department affirmed Surrogate’s Court’s determination that the decedent was not subjected to undue influence in making a will.  The Court explained the legal principles at work as follows:

It is well settled that a will contestant seeking to prove undue influence must show the “exercise [of] a moral coercion, which restrained independent action and destroyed free agency, or which, by importunity [that] could not be resisted, constrained the testator to do that which was against [his or] h[er] free will” …. “Undue influence must be proved by evidence of a substantial nature . . . , e.g., by evidence identifying the motive, opportunity and acts allegedly constituting the influence, as well as when and where such acts occurred” …. “Mere speculation and conclusory allegations, without specificity as to precisely where and when the influence was actually exerted, are insufficient to raise an issue of fact” … .  Matter of Lee, 235, 4th Dept, 6-7-13

 

Respondent Failed to Demonstrate Insertion of Feeding Tube Would Impose an “Extraordinary Burden” Upon the Petitioner​

The Fourth Department reversed Supreme Court and ordered insertion of a feeding tube under general anesthesia for petitioner, Joseph P.  The Fourth Department noted there was evidence Joseph P. was “alert, awake, and communicative, … enjoys social interaction and activities” and, with a feeding tube, has “an excellent prognosis with many years of life.”  The Fourth Department wrote:

It is undisputed that the “threshold requirement” under [Surrogate’s Court Procedure Act] section 1750-b for allowing Joseph P.’s guardians to make the decision to withhold life-sustaining treatment has been met … . Joseph P.’s attending physician also fulfilled the requirements of section 1750-b (4) (a) of “confirm[ing] to a reasonable degree of medical certainty” that Joseph P. “lacks capacity to make health care decisions,” and of consulting with another physician “to further confirm” that lack of capacity …. There is also no dispute that Joseph P. has “a medical condition other than . .. mental retardation which requires life-sustaining treatment, is irreversible and . . . will continue indefinitely” (SCPA 1750-b [4] [b] [i] [C]), and that, without such treatment, he “will die within a relatively short time period” (SCPA 1750-b [1]). The sole issue before us is whether, in view of Joseph P.’s medical condition and the expected outcome of the life-sustaining treatment, i.e., the surgical insertion of the feeding tube artificially providing nutrition or hydration, imposes an “extraordinary burden” on him (SCPA 1750-b [4] [b] [iii] [B]).
Upon our review of the record, we conclude that respondent failed to establish by the requisite clear and convincing evidence that providing nutrition and hydration to Joseph P. by means of medical treatment would impose an extraordinary burden on him (see SCPA 1750-b [1]; [4] [b] [iii] [B…).  Matter of Joseph P. …, CA 13-00798, 4th Dept, 5-24-13

 

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Appropriate Surcharge and Interest Imposed for Breach of Fiduciary Duty

In determining the appropriate surcharge to be imposed upon an executor which breached its duty to preserve decedent’s tangible property, as well as the appropriate interest rate to impose with respect to a delay in distributing assets, the Second Department wrote:

“[A] nominated executor has the duty to preserve estate assets for the protection of those persons eventually entitled to receive them” … . * * * [W]e find no reason to disturb the Surrogate’s finding that the petitioner breached its duty, thereby warranting the imposition of a surcharge. * * *

Where a surcharge is imposed for a breach of fiduciary duty, it is a matter within the discretion of the trial court whether to award interest upon the surcharge, and at what rate (see CPLR 5001[a]; 5004;…). While the highest rate of interest might be appropriate where the trustee’s breach of duty is willful or characterized by bad faith…, here, the record reflects that the petitioner’s failure in its duty to secure the decedent’s tangible personal property constituted an honest mistake. …

As a general matter, legacies are payable seven months after issuance of letters testamentary unless otherwise directed by the testator or required by the circumstances of the estate, including the executor’s need to retain sufficient funds to cover administrative costs and debts of the decedent (see EPTL 11-1.5[a]…). Under certain circumstances, an executor may retain a disposition as a setoff for a debt owed by the beneficiary to the decedent or the estate …. In a proceeding to compel payment of a disposition or distributive share, “[t]he rate of interest to be paid on a pecuniary bequest is governed by EPTL 11-1.5” …. The court may fix interest on any disposition awarded at the rate of 6% (see EPTL 11-1.5[d]), or, upon the court’s additional finding that the fiduciary’s “delay in payment was unreasonable” (EPTL 11-1.5[e]), the court may fix interest at the annual rate of 9% set forth in CPLR 5004 …. Matter of Marsh, 2013 NY Slip Op 03679, 2nd Dept, 5-22-13

 

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Will Provisions Can Not Be “Re-Written” by Court Even If Intestacy Results

In determining Surrogate’s Court properly determined mortgages secured by notes represented personal property and not “interests in real property” within the meaning of the will, the Second Department wrote:

Here, as the Surrogate’s Court properly recognized, notes secured by mortgages are generally construed to be personal property…, and there is nothing in the language of the decedent’s will that manifests an intent to include the subject notes within the clause devising his “interests in real property” to the petitioner. The construction suggested by the petitioner cannot be accepted since the court should not rewrite a will or supply an omission not necessarily implied by the language used, even though intestacy with respect to a particular asset results … . Matter of Cincotta, 2013 NY Slip Op 03671, 2nd Dept, 5-22-13

 

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Elements of Constructive Trust Not Demonstrated 

The plaintiff had conveyed her 25% interest in real property to her cousin, allegedly with the understanding plaintiff would share in the proceeds if the property were sold. Eventually the cousin was deeded 100% of the property. The cousin lived on the property from 1989 to 2005.  The cousin deeded the property to her brother and his wife, the defendants. The defendants maintained the house and paid taxes on it, although they did not live there.  The plaintiff did not contribute to the property maintenance or taxes and did not submit any proof that the defendants had been unjustly enriched by owning the property (i.e. rental income). The Second Department upheld the referee in finding that the plaintiff had not proved the elements of a real-property constructive trust.  The Second Department explained the elements as follows:

“The elements of a constructive trust are a confidential or fiduciary relationship, a promise, a transfer in reliance thereon, and unjust enrichment… . These requirements, however, are not to be rigidly applied …. The ultimate purpose of a constructive trust is to prevent unjust enrichment, and it will be imposed ” [w]hen property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest'” ….  Broderson v Parsons, 2013 NY Slip Op 03050, 2nd Dept, 5-1-13

 

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Undue Influence and Constructive Fraud Causes of Action Against Attorney Should Not Have Been Dismissed

The First Department reversed Surrogate’s Court’s dismissal of undue influence and constructive fraud causes of action against an attorney who was the beneficiary of a one million dollar trust account created by the decedent.  In finding questions of fact had been raised concerning both causes of action, in part concerning whether the attorney had misrepresented his financial condition to the decedent, the First Department wrote:

Surrogate’s Court erred in dismissing the claim of undue influence as there were conflicting inferences of both undue influence and the lack thereof. For example, the evidence showed that, from September 2009 to January 2010, as decedent’s health continued to deteriorate, defendant repeatedly wrote and called decedent to request the creation of a $1 million trust account and suggested that he would suffer a financial crisis if he did not receive it, and decedent complained to plaintiff (his wife) that defendant would not stop asking him for money. … Under the circumstances presented, defendant failed to overcome the presumption of undue influence and failed to eliminate any triable issue of fact warranting dismissal of the count ….  * * *  The count of constructive fraud was also improperly dismissed. Defendant, who had a substantial net worth at the time of decedent’s death, nevertheless repeatedly represented that his savings were deteriorating and that he would suffer a financial crisis if decedent did not give him the $1 million. While decedent was aware of the salary paid to defendant over the years as counsel to decedent’s company, this alone did not amount to clear evidence to eliminate any triable issue of fact as to whether defendant had misrepresented his financial condition, and whether decedent relied upon it … .  Matter of Schneiderman, 2013 NY Slip Op 02687, 1st Dept, 4-23-13

 

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Forum Selection Clause Requiring All Enforcement Actions to be Brought in Surrogate’s Court Enforced 

A forum-selection clause in a stipulation required any action necessary to enforce the terms of the stipulation be brought in Surrogate’s Court, Queens County.  When a proceeding to discharge a mortgage, which was related to the stipulation, was brought in Supreme Court, Queens County, the court dismissed the proceeding with leave to renew in Surrogate’s Court pursuant to the forum-selection clause. In affirming, the Second Department wrote:

 “Although once disfavored by the courts, it is now recognized that parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract” … . “A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court” … . Matter of Chiantella v Lucy Chiantella Revocable Trust of 2002, 2013 NY Slip Op 02575, 2012-01935, Index No 1853/11, 2nd Dept 4-17-13

 

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Whether a Confidential Relationship Existed With Decedent Is a Question of Fact for the Jury; Application of Dead Man’s Statute Explained

In reversing the Surrogate’s Court verdict, the Third Department, in a decision by Justice Spain, determined that the existence of a confidential relationship with the decedent is a question of fact for the jury (Surrogate’s Court determined the existence of the relationship as a matter of law).  In addition, because the matter is to be retried, the Third Department included a useful discussion of how the Dead Man’s Statute (CPLR 4519) should be applied:

Under  the  doctrine of “‘constructive fraud,'” where  a  confidential relationship exists between  two parties to a transaction “‘such that they were dealing on unequal terms due to one party’s weakness, dependence or trust  justifiably reposed  upon  the  other  and  unfair advantage  is rendered  probable,'” the  burden  of proof  with  respect to allegations of undue influence will be shifted to the stronger party to show, by clear and convincing evidence, that no undue influence was used … In determining whether a confidential  relationship  exists,  “the  existence  of  a  family relationship does  not, per se, create a presumption  of undue influence; there must be evidence of other facts or circumstances showing  inequality  or  controlling influence” … ..The  existence of such a relationship will ordinarily be  a question of fact … . *  *  *

The [Dead Man’s] statute precludes an interested party from being “examined as a witness in his [or her] own behalf or interest . . . concerning a personal transaction or communication between the witness and  the deceased person” (CPLR 4519 …). Given that the “purpose of the rule is ‘to protect the estate of the deceased from claims of the living who, through their own perjury, could make factual assertions which the decedent could not refute in court’…, it   will not preclude any testimony elicited by the representative of the estate, nor does it preclude testimony of transactions between decedent and a non-interested third party …. Further, the statute’s protections with regard to a particular transaction may be waived where the representative “testifies in his [or her] own behalf concerning a personal transaction of his adversary with the deceased” or when he or she “elicits testimony from an interested party on the personal transaction in issue” …  .  Matter of Nealon, 513733, 3rd Dept 3-28-13

 

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